Why Bitcoin Could Be Headed To $10,000 And Then A Lot Higher After That

This Bull Market Is Just Getting Started

Bitcoin (BTC-USD) has just gone through one of its most tumultuous bear markets in history. Bitcoin prices tumbled by as much as 85%, and
many altcoins crashed by 95-99%. The cryptocurrency complex experienced
a price collapse of nearly 90%, dropping from over $800 billion at its
peak to just $100 billion when the bottom hit.

Bitcoin 2-year logarithmic chart

Source: Bitcoincharts.com

However,
since the late 2018 bottom, prices of Bitcoin and cryptocurrencies in
general have moved substantially higher, strongly suggesting that a new
bull market began last December.

Cryptocurrency Complex 2-year logarithmic chart

In fact, given the recent price
action and supportive constructive fundamental elements surrounding
cryptocurrencies, Bitcoin could achieve a price of $10,000 by the end of
this year.

Since
Bitcoin is at around $5,250, it would need to participate by about 90%
from today’s price to achieve my price target of $10K

Bitcoin’s
1-year chart looks extremely bullish. We see that capitulation took
place last November and brought prices to abnormally low levels by
mid-December. This appeared to be a period of indiscriminate panic
selling, a washout.

Source: BitcoinCharts.com

The
two-year chart also appears extremely constructive as it indicates
Bitcoin is attempting to enter a new bull market. We are seeing positive
buy side volume pick up in recent months, suggesting renewed buy
interest.

The longer-term image paints another
constructive picture, as we’ve seen Bitcoin go through several nearly
identical price cycles in the past. Each consecutive wave produced much
higher prices.

Bitcoin’s next major support is
$6,000 – 6,500, then around $8, but the ultimate test comes at $10K,
which Bitcoin should breakthrough on improved technical and sentiment
based momentum.

Bitcoin bottomed, is still
in the very early stages of its new bull cycle, and is likely to
appreciate considerably over the next 3-5 years. Shorter-term, we may
see that $10K – $15K prices within the next 12-18 months, 90%, and 185%
gains respectively.

Signs of Stabilization and Improving Market Conditions

We see that Bitcoin has gained 65%, and the overall cryptocurrency market is up by 70%. Bitcoin dominance has stabilized at 50 – 55% and the entire market is beginning to behave in a much more stable manner.

Bitcoin Dominance

Source: Coinmarketcap.com

At
55% dominance Bitcoin’s value is equivalent to 55% of the entire
cryptocurrency market. However, as this cryptocurrency bull markets
progresses certain altcoins will likely drastically outperformer
Bitcoin.

In fact, we’ve seen this occur already with
Litecoin, Bitcoin Cash, Dash, and many others. It is also likely that
some high quality transactional coins like Zcash and Dash could be
trading higher, as they allow for some of the most efficient, mass scale transactions to occur seamlessly, with near zero cost.

Bitcoin: A Small Drop in a Very Big Bucket

Let’s look at the big picture, Bitcoin is a very tiny drop in a very big financial bucket right now. Its market cap is only $93 billion,
while the entire cryptocurrency complex’s is just $170 billion. This is
miniscule relative to all the fiat money and gold supply in the world
market today.

Bitcoin and cryptocurrencies are
competing directly with physical fiat money, as well as with the M2, M3,
and investible gold. The primary markets are global medium of exchange,
and global store of value. However, Bitcoin and altcoins are also
starting to compete with stocks, commodities, and even debt as they are
becoming competing trading/investment vehicles.

So, How Big is The Market?

The
broad money supply along with investable gold account for about $95
trillion of the world’s assets. Equity marketers are also huge,
representing about $73 trillion in global value. Global debt is
estimated to be a around $215 trillion, and if we look at derivatives,
estimates point to over 1 quadrillion in total worldwide derivatives.

We’ll
exclude derivatives for now, but incorporating $95 trillion of global
store of value and medium of exchange, $73 trillion in stocks, and $215
trillion in debt, provides Bitcoin with a $383 trillion market to
continue to expand market share in.

Right now, the
cryptocurrency complex in total is worth only $170 billion, compared to a
massive $383 trillion in fiat, debt, and stock market competing assets.
In fact, $170 billion represents just 0.04%, fewer than half of one
tenth of one percent of the market’s immense value. This essentially
implies that there is about 99.96% of untapped market share for Bitcoin
and other digital assets to go after.

At just 1%
market share, the cryptocurrency complex would be worth $3.83 trillion,
and if Bitcoin remains roughly 50% dominant its market cap would be
around $1.9 trillion, giving it a price target of $90,000.

At
5% of market share, the cryptocurrency complex would be wort around
$19.5 trillion, and if Bitcoin holds on to 50% dominance rate, Bitcoin’s
market cap could reach nearly $10 trillion, making each Bitcoin worth
approximately $450,000.

Even if Bitcoin’s dominance
declines to around 20% share of the market, Bitcoin’s market cap would
be around $3.9 trillion, making each Bitcoin worth about $186,000.

This is a longer-term trajectory scenario, but as Bitcoin’s network expands, it could materialize within the next 5-10 years.

Bitcoin: The Network Effect

The internet, or Facebook (FB), would they be enormously profitable and successful if only a handful of people used them? How about a million, or 10 million, a hundred? It is when millions and billions of people begin using these networks that they become increasingly powerful and profitable.

The same principle applies to Bitcoin, the more people
use the Bitcoin network, the higher its price rises, much like the value
of a stock price in a company. Today, it is estimated that nearly 20 million people around the world use, trade, or own Bitcoin.

There
is an irrefutable correlation between Bitcoin’s price and the number of
blockchain wallets being created throughout its history. The trend is
clear, as Bitcoin gains popularity, more and more users continue to join
the Bitcoin blockchain network.

Blockchain Account Growth

Source: Blockchain.com

Blockchain
account growth has gone 50% higher YoY, and appears to be getting ready
to reaccelerate. It seems likely that price will begin to pick up with
increased demand going forward. We also know that blockchain account
growth is highly correlated with Bitcoin’s appreciation.

We
can essentially pinpoint that Bitcoin’s price has peaked at roughly 1%
of its blockchain users, several times now. Bitcoin’s price to
blockchain accounts at peaks was $7 at 1,000 accounts, $200 at 200,000
accounts, $1,200 at 1 million accounts, and $19,500 at 20 million
accounts.

So, how much will Bitcoin be worth if there are 100 million blockchain accounts, or 1 billion blockchain accounts?

Simply
going by past price appreciation, Bitcoin could be worth $100K if
around 100 million people join the Bitcoin network, and it could be
worth $1 million if a billion people or more users are ever on the
Bitcoin blockchain network.

Bottom Line: Buy Bitcoin Now, Your Future Self Should Thank You for it

The
vast majority of the population do not own, trade, or use Bitcoin right
now. This leaves Bitcoin with incredible growth momentum, and a
massive, 99.5% untapped market.

Meanwhile,
the global fiat based market represents roughly $373 trillion in total
value. The entire cryptocurrency complex is worth but a fraction, $175
billion, 0.04%, relative to the fiat’s 99.96% market share.

Bitcoin
and the cryptocurrency complex in general can continue to capture
market share in these massive global medium of exchange, store of value,
and trading/investing vehicle markets.

Technical factors and other dynamics also point to much higher prices for Bitcoin and the cryptocurrency complex.

Buy Bitcoin now, and your future self will thank you for it.

12 Month Price Target: $10K

Zcash: Likely Very Undervalued

Zcash is a coin much like Bitcoin that specializes in privacy protection,
something Bitcoin does not. The currency and its blockchain are also
considered to be remarkably safe and reliable. Zcash is currently at
$60, 93% cheaper from its $850 price it at the start of 2018.

Source: Coinbase

Zcash can be
looked at like a startup company that offers an incredibly efficient
payment system with enormous long-term potential. Yet, it is currently
valued at only $385 million.

Zcash Chart

Zcash Log ChartZcash was valued at around $5.5 billion at the time when it
topped, so it could be argued that the company’s valuation got ahead of
itself. However, now that it is current at $385 million the valuation
appears much more reasonable and compelling.

Safety First: some common risks to be aware of with crypto assets

Detrimental Government Regulation

Possibly,
the No. 1 long-term threat Bitcoin faces is detrimental government
regulation or an all-out Bitcoin ban. If major Bitcoin-friendly
governments like the U.S., E.U., Japan, South Korea and others follow
the footsteps of China and essentially make Bitcoin use and trading
illegal, it could have catastrophic consequences for Bitcoin’s price.

Continued Functionality Issues

Another
risk factor is the concern that Bitcoin may never become a widely-used
transactional currency due to its issues with speed and scale. Yes, the
Lightning Network promises to solve many of the issues associated with
speed, cost and scale, but there’s no guarantee that the LN will become
widely adopted, even over time.

Therefore, there’s
the risk that newer and more efficient digital currencies like Litecoin,
Bitcoin Cash and others may make Bitcoin somewhat obsolete as an actual
medium of exchange for the masses.

Continued Security Breaches and Fraudulent Activity

Continued
security breaches in the Bitcoin world concerning exchanges and
individual wallets is a constant concern. If significant breaches
continue, investors and users may start to lose confidence in the system
and demand could decrease as well.

Likewise, there
are fraud cases. In an industry that’s still loosely regulated,
substantial fraudulent activity is a persistent risk factor. Just like
with security breaches, when people get ripped off, it reflects poorly
on the entire industry and demand along with prices can suffer.

Bitcoin is Not for Everyone

The
bottom line is that Bitcoin is not for everyone. I view it as an
investment for people with a relatively high risk tolerance, and even
then, maybe only 5%-20% of a portfolio’s holdings should be allocated to
digital assets.

Bitcoin is still a relatively new phenomenon, and no one truly knows exactly how it’s going to play out over the long term.

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Disclaimer

Neither the author nor the publication assumes any responsibility or liability for any investments, profits, or losses made as a result of this information. Cryptocurrency trading and investing are risky propositions, and market participants are advised to always conduct thorough research.